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Today's edition of the Saxo Morning Call features Head of Forex Strategy John Hardy and Head of Equities Strategy Peter Garnry discussing the overnight rally in Chinese shares, which are now up 4% from their lows.
Article / 06 July 2018 at 14:32 GMT

The devil is in the data details

FX Trade Strategist / www.Loonieviews.net
Canada
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By Michael O'Neill

The Devil Wears Prada and, apparently, plays a role in economic statistics. FX markets dismissed the opening salvos of the China/America (ChinAm) trade war as “old news.” They didn’t feel the same way about this morning’s US employment and merchandise trade reports.

US nonfarm payrolls rose 213,000 in June, beating the forecast for a 195,000 gain. A rise in the jobless rate to 4.0% from 3.8% was attributed to more unemployed workers looking for jobs. Average Hourly Earnings were a tad softer. The US Trade deficit narrowed to a 1 ½ year low.
EURUSD rallied, rising from 1.1703 to 1.1762, in part because a strong report was expected. The break above the 1.1725-30 area triggered weak stop-losses and encouraging positions were trimmed ahead of the weekend. A break above 1.1770 would extend gains to 1.1860.

The rest of the G-10 majors managed to post gains at the expense of the US dollar except for the Canadian dollar. It had its own data issues. The Canadian employment report was better than expected. Canada gained 21,800 jobs, but most of them were part-time. Canada’s trade deficit widened, and exports were weaker than expected. USDCAD chopped about in a 1.3080-1.3152 range with both sides tested when the data was released. Today’s data will not derail the expected Bank of Canada rate hike on July 12. However, trade war concerns suggest support in the 1.3050-1.3180 area will hold.

Wall Street is staying close to home. The DJIA is now slightly in the red while the S&P 500 is a tad higher. President Trump’s response to China’s retaliatory tariffs may limit gains today.

Chart: USDCAD 4-hour with uptrend line and support highlighted
chart
Source: Saxo Bank
06 July
John Shaw John  Shaw
I would love to know who and where comes up with all the "re-entries into the work force"?
Joke.
06 July
Michael O'Neill Michael O'Neill
That's an economist term. Accountants use "Adjustment to balance"
06 July
John Shaw John  Shaw
Looks like support at 1.31 is caving away.
06 July
Michael O'Neill Michael O'Neill
I wouldn't get excited until 1.3050-80 goes.
06 July
John Shaw John  Shaw
Trade wars aside, this will light a fire under CAD but who knows how the other winds out there will temper it.? Have to wait and see but oil is going UP one way or another.
https://www.bnnbloomberg.ca/there-are-fears-about-an-oil-super-spike-above-us-150-1.1103957
06 July
John Shaw John  Shaw
I'm over 50 now. Takes a lot to get ol Johnny excited anymore. LOL
Thanks bud.... :)
06 July
Michael O'Neill Michael O'Neill
LOL Life gets better over 50. (I tell myself that every day) BTW, Although oil is important to USDCAD, it is diminihsing. The US is self-sufficient in oil and Canada's product is land-locked. that's why Canadian crude trades at a discount. If the US doesn't buy our oil, who will?
06 July
John Shaw John  Shaw
If we were smart ( and it seems we are not ) we would be refining this oil for our own use rather than giving the raw's away for the discounts we are. Lots of refining jobs. We have a totally balless PM that could sweep aside the leftist environmental opposition and we could have an economic boom.
That is a whole other discussion we do not have time or space for today I'm sure you agree.

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